The Consumer Financial Protection Bureau has made an “earth-shattering” change in deciding to drop a lawsuit against a payday lending company that was accused of deceiving customers, according to a law professor and former employee at the agency.
The CFPB submitted a motion to dismiss the lawsuit on Thursday against Scott Tucker, who was sentenced to 17 years in prison earlier this month on separate charges of collecting unlawful debts and falsely stating that businesses were owned and operated by Native American tribes.
The decision by the CFPB to drop the lawsuit is an indication that the agency is “going to stand down on the online payday lenders who refuse to comply with state interest-rate caps,” said Christopher Peterson, a former CFPB employee who left the agency in 2016 and is a law professor at the University of Utah.
Originally, the lawsuit was brought by the CFPB under former director Richard Cordray, who was active in going after payday lenders, especially those that were attempting to violate state interest rate caps by by claiming affiliations with Native American tribes, which argue that state rules don’t apply to them.
The CFPB is also re-considering a rule regulating the payday lending industry, which it had been working on for several years.
